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U.S. rental inflation accelerated in August as shelter costs rose 0.7%, marking the biggest monthly increase since 1991, and keeping overall inflation elevated.
The August data, published in a Labor Department report on consumer prices Tuesday, followed several months in which measures of rents in the consumer price index logged the biggest gains in more than three decades. Analysts say they have more room to run in the months ahead as more leases expire and incorporate higher market prices.
Rental prices surged last year, and although they have since moderated, long-term tenants still haven’t experienced the biggest hikes in asking prices.
Shelter costs are the largest component of the consumer price index, comprising about a third of it. That’s one of the reasons why they are typically the most important drivers of inflation over multi-year periods. They also tend to dominate the gauges of “underlying inflation” that Federal Reserve officials rely on when deciding the course for interest rates.
Along with rents, food and medical care were among the largest contributors to price increases last month.
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